It is widely known that money management issues persist in the sport industry, music industry, and other industries where individual performers or talented persons (collectively “Talent”) achieve large salaries in short periods of time. For example, within two years of retirement, 78% of former NFL players file for bankruptcy or experience financial stress (for NBA players, 60% do so within five years). Three out of five Premier League soccer players declare bankruptcy after retirement. Many athletes face major financial burdens in retirement primarily due to ill-conceived investments, a failure to budget and moderate spending habits, or as a result of large medical bills related to career injuries. One of the causes attributable to poor money management comes as a direct result of a culture that glorifies conspicuous consumption during a short-term period with little long-term, post-career financial planning.
Further exacerbating these issues, the payroll system for NFL and NBA players can add more issues as the athletes receive salaries on a weekly basis and do not receive any income during the off-season. As a result, many athletes seek private loans, which may charge interest rates up to 40%, since lenders claim that sports is a very risky career. This issue leads to the pilling up of debts. Many athletes attempt to create additional sources of income through private investment deals. Of these private investment deals, only about one in thirty are successful. Furthermore, Talents are faced with several fraudulent investment offers.
Another problem is that many Talents in the world are discouraged by the traditional financial system from working on an invention or artwork that they are passionate about. With conventional financing methods, the financing decision is limited to a few expert decision makers such as banks, investment funds, or production companies. This in turn limits access to funds that may be necessary for a Talent to perform and produce.